Termination Based on Five Illogical Conclusions Lacking Factual Support

LOS ANGELES, April 4, 2012

Kantor & Kantor, LLP announced today a legal victory in the U.S. District Court for the Northern District of California on behalf of client Judi Peterson, who suffers from Chronic Fatigue Syndrome (CFS), against the AT&T Umbrella Benefit Plan No. 1 ("AT&T"), administered by third-party administrator Sedgwick CMS.

In reaching its decision, the District Court ruled that AT&T abused its discretion and wrongfully denied Ms. Peterson long-term disability benefits. The court found AT&T's benefits termination was illogical and without support in inferences that may be drawn from the facts.

In particular, the court determined that AT&T had abused its discretion five specific ways:

Although the evidence showed that Ms. Peterson's condition in 2009 had remained unchanged since AT&T's initial finding that she suffered from disabling CFS in 2006, AT&T still terminated her benefits.

The fact that there are no objective tests for CFS did not stop AT&T from terminating Ms. Peterson's benefits based, in part, on a lack of objective evidence.

AT&T relied on a medical record review and a Transferrable Skills Analysis, neither of which considered her disabling fatigue.

Even though AT&T had hired three medical professionals from Insurance Appeals, LTD (aka Network Medical Review or NMR) to conduct paper reviews of Ms. Peterson medical history, those medical professionals either failed to address Ms. Peterson's CFS or made incorrect diagnoses.

AT&T failed to engage in a "meaningful dialogue" with Ms. Peterson surrounding its reasons for denying benefits. In other words, AT&T did not follow the law requiring it to ensure that the reasons for the termination of benefits actually had factual support.

"This decision illustrates that policyholders cannot always rely on an 'unbiased' third-party administrator to make logical and fact-based benefits decisions," said Brent Dorian Brehm, a litigation associate at Kantor & Kantor and the lead trial attorney representing Ms. Peterson. "Denials must be carefully scrutinized, and if the conclusions appear unfair, incorrect, or ridiculous, they probably are."